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IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
C. PRAVEEN KUMAR, TARLADA RAJASEKHAR RAO, JJ.
M/s.Sembcorp Energy India Limited – Appellant
Versus
The State of Andhra Pradesh – Respondent
Writ Petition Nos.11194, 11198, 11206, 11263, 17275, 28836 & 30292 of 2021
Decided on : 26-08-2022
Refund - Export of Electricity - Electricity Act, 2003, IGST Act, 2017, CGST Act, 2017 - Section 16 of IGST Act, 2017 - Rule 89 of CGST Rules, 2017 - Amendment to Rule 89 of CGST Rules, 2017 - Clarification on Export of Electricity - Retrospective Application
Fact of the Case:
The petitioner participated in a tender process to supply power to Bangladesh and entered into Power Purchase Agreements (PPAs) with the Bangladesh Power Development Board. The petitioner applied for a refund of unutilized Input Tax Credit under Section 54 of CGST Act, 2017, but the claim was rejected due to non-submission of shipping bills and lack of evidence of electricity export to Bangladesh.
Finding of the Court:
The court found that the petitioner had transmitted electricity to Bangladesh and was entitled to claim a refund of Input Tax Credit. The court also held that the amendment to Rule 89 of CGST Rules, 2017, which clarified the procedure for claiming a refund on account of export of electricity, should be given retrospective effect.
Issues: The main issues were the rejection of the refund claim due to non-submission of shipping bills and lack of evidence of electricity export to Bangladesh.
Ratio Decidendi: The court held that the petitioner had transmitted electricity to Bangladesh and was entitled to claim a refund of Input Tax Credit. The court also determined that the amendment to Rule 89 of CGST Rules, 2017, which clarified the procedure for claiming a refund on account of export of electricity, should be given retrospective effect.
Final Decision: The court allowed the writ petitions, set aside the orders under challenge, and remanded the cases back to the authorities to deal with the claim of refund in terms of the court's order. The petitioner was directed to file relevant reports evidencing the transmission of electricity before appropriate authorities, if not already filed.
ORDER :
C. PRAVEEN KUMAR, J.
Heard Sri Raghavan Ramabadran, learned counsel for the petitioner, learned Special Government Pleader for Commercial Tax, for respondent no.1 and Sri Suresh Kumar Routhu, learned Senior Standing Counsel for Central Board of Indirect Taxes and Customs [for short, “CBIC”] for respondent nos.2 and 3.
2. The issues involved in all the seven (7) writ petitions are one and the same. It is to be noted that W.P.Nos.11194, 11206 & 11263 of 2021 came to be filed against the order of Additional Commissioner, (GST Appeals) and W.P.Nos.11198, 17275, 28836 & 30292 of 2021 are filed against the order of Deputy Commissioner of Central Tax.
3. W.P.No.11194 of 2021, which is filed, against the order in Appeal No.GUN-GST-000-APP-001-20-21 GST, dated 30.04.2020, wherein the order rejecting refund was upheld, is taken as a lead petition for the purpose of deciding the issues involved.
4. In a nut-shell, the facts in issue, are that there was a Memorandum of Understanding for the purpose of supply of power between India and Bangladesh. The petitioner participated in the tender process floated by the Bangladesh Power Development Board [for short, “BPDB”] and was awarded contract by BPDB, pursuant to which, a Letter of Intent for purchase of 250 MW electricity power, was issued on 07.08.2018. Thereafter, the petitioner entered into a Power Purchase Agreements (PPAs) with BPDB and started supplying electricity/electrical energy to BPDB in accordance with the Indian Electricity Act, 2003 and the Rules and Regulations made thereunder. The Central Electricity Regulatory Commission, which is a statutory body under Section 76 of the Electricity Act, 2003, framed Regulations and Guidelines on Cross Border Trade of Electricity (Guidelines for Import/Export (Cross Border) of Electricity, 2018). Necessary guidelines to that effect were issued on December, 2018. As per the Regulations, the participating entities in India, proposing to engage in cross border trade of electricity with neighbouring countries, shall first obtain approval of designated authority appointed by the Central Electricity Authority. The material on record show that the petitioner, after obtaining approval from the Central Electricity Authority, Ministry of Power, Government of India, entered into Power Purchase Agreement, with a unit in Bangladesh. It is needless to mention that the electricity to be supplied by the petitioner to BPDB would be as per the dispatch schedule provided by BPDB and then injected to the Transmission Grid at the interconnection point located in Andhra Pradesh. Reading meters would be installed at the place, where the electricity generated is injected into Inter- State transmission line, so as to record the quantum of electricity that has been supplied by the petitioner to BPDB. The injected electricity would then get transmitted from the interconnection point to Bohrompur substation, West Bengal, India, which is the ‘Delivery Point’ through an Inter-State transmission line. From the said point, the electricity would be transmitted to Bangladesh through the cross border transmission line, between Bohrompur substation, India and Bheramara substation, Bangladesh.
(a) The material on record further indicates that Regional Energy Account (REA) report is being issued on monthly basis by the Southern Regional Power Committee, which is a unit of Central Electricity Authority of Government of India, indicating the number of units of electricity transmitted by each supplier of electricity to a particular recipient. The report also identifies the destination to which electricity is supplied by the petitioner.
5. The circumstances, which made the petitioner to file the writ petition, are:-
(a) Since export of electrical energy is treated as Zero rated supply under Section 16 of IGST Act, 2017, the petitioner applied for refund of unutilized Input Tax Credit through a refund claim by filing application under Form GST RFD-01A in terms of Section 54 of CGST
The court established that for continuous supply of goods, the REA from the previous month is valid for refund applications in the succeeding month under the CGST Act.
Transitional credit recognized in GST Form TRAN-1 must be considered for refund claims under Section 54 of the CGST Act, regardless of its verification timing.
The court established that transitional CENVAT credit can be carried forward into the GST regime and utilized for claiming refunds under the CGST Act, rejecting hyper-technical interpretations by aut....
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